Five US Regulators Clarify SAR Customer Communication Rules
Five key U.S. financial regulators have issued a joint statement clarifying the rules on suspicious activity report confidentiality, addressing how institutions may communicate with customers who may be the subject of a SAR.
Five major U.S. financial regulators—the Federal Reserve, FDIC, NCUA, OCC, and FinCEN—have issued a joint statement to clarify how financial institutions can communicate with customers regarding suspicious activity without violating the strict confidentiality requirements of the Bank Secrecy Act. Federal law prohibits disclosing to any person involved in a transaction that a Suspicious Activity Report (SAR) has been filed, a practice known as “tipping off.” This prohibition creates practical challenges for institutions when they need to terminate customer relationships or obtain information related to potentially illicit activity.
The new guidance clarifies that institutions are not prohibited from discussing account closures or the underlying activity with a customer, so long as the existence of a SAR is not disclosed. For sophisticated counsel and their financial-institution clients, this provides a clearer path for navigating sensitive customer conversations while mitigating legal and regulatory risks. Firms should review and update their internal policies, procedures, and training for AML compliance and customer relations to align with this interagency guidance.